Month: February 2023

Florida Beneficiaries or Heirs May or May Not Have to Pay Taxes on Inheritances

Posted by CSG Firm on

There are merely a few states in this nation which can levy taxes on inherited property. These taxes are sometimes affectionately called death taxes. For beneficiaries or heirs inheriting property in the state of Florida, they will be happy to know that Florida does not have a separate income tax for inherited property. Inherited money is also untaxed at the state level since Florida does not have an income tax system. However, all property is not treated the same when it is inherited.

The following are several tax situations that inheritors of Florida assets should be aware.

While Florida does not levy an income tax on inherited property, the Federal government does. However, the federal inheritance tax only applies to estates over $12.92 million in 2023, and it is double for married couples. The tax is levied against the estate, so heirs will not be on the hook for these death taxes. HOWEVER, in 2025 the amount will be reduced to $5.49 million (adjusted for inflation), unless the law is changed. The gross estate includes Trust assets, assets held in the decedent’s name, jointly held property, accounts designating a beneficiary, life insurance, annuities, among others.

If one inherits a retirement account from a loved one, they would not have taxes levied on the transfer of the account, but taxes may be charged when one tries to withdraw funds from the account. What taxes are imposed will depend on the type of retirement account. An attorney can help ensure understanding of the tax ramifications associated with said inherited property.

If one inherits property that generates revenue, like a piece of rental property for instance, they could owe taxes on the income gained or generated from owning the transferred property. Consequently, if one inherited a multi-family building with tenants and they paid rent during the probate period, one could owe taxes on funds which were collected during the said interim period.

In Florida, there are no separated property taxes, but beneficiaries will owe federal taxes if the inherited property is sold after transfer. The heir should only owe taxes on the gains (capital gains) of the property, or if it increased in value from the point of transfer (date of death) until the point of sale.  The foregoing is called stepped-up basis. Stepped-up basis refers to a tax policy which looks at the market value of assets at the time when the person inherits the asset or real property (i.e., the deceased’s date of death) instead of the value when the prior deceased owner purchased the said assets or real property. If the asset is later sold, the higher new cost basis would be subtracted from the sale price to calculate capital gains tax liability, if any.

The foregoing is just a general overview of the subject of whether Florida Beneficiaries or Heirs may or may not pay taxes on inheritances.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

Claims Against the Federal Government & it’s Agencies under the Federal Tort Claims Act

Posted by CSG Firm on

The Federal Tort Claims Act is a 1946 federal statute that permits private parties to sue the United States in a federal court for most torts committed by persons acting on behalf of the United States. Historically, citizens have not been able to sue their government, which is a doctrine referred to as sovereign immunity. It is legal doctrine that ordinarily prohibits private citizens from bringing a sovereign state into court without its consent. Until the mid-20th Century, a tort victim could obtain compensation from the United States only by persuading Congress to pass a private bill compensating him or her for their loss.

Under the Federal Tort Claims Act, the federal government acts as a self-insurer, and recognizes liability for the negligent or wrongful acts or omissions of its employees acting within the scope of their official duties. The United States is liable to the same extent an individual would be in similar circumstances.

The Federal Tort Claims Act (FTCA) sets forth procedures for presenting and resolving administrative monetary claims for personal injury, property damage, or death arising from the alleged negligence of officers and employees.

The FTCA has several exceptions that categorically bar plaintiffs, victims or claimants from recovering tort damages in certain categories of cases. Federal law also restricts the types and amount of damages a victorious plaintiff may recover in an FTCA suit. Additionally, a plaintiff or claimant may not initiate an FTCA lawsuit unless they have timely followed a series of procedural requirements, such as providing the government an initial opportunity to evaluate the subject claim and decide whether to settle it before the case proceeds to federal court. 

When it comes to making a claim and/or suing the Federal government, or any of its agencies, there is no cap like there is in Florida. But there are other limitations. Again, that situation is governed under the Federal Tort Claims Act (28 U.S.C §2671), and the case or claim must also be brought only following proper written notice. In the administrative phase, a specific document must be filed with the government entitled Form 95.

Once the claimant or plaintiff gets past that administrative procedure, a claimant would file suit in federal court. The United States Attorney’s office defends these cases. One does not get a jury trial, i.e., the case is heard by a federal district judge, who alone decides the case called a bench trial.

There are many examples of Federal Tort Claims Act cases, which can include anything from medical malpractice at military hospitals to Federal Aviation Administration errors that cause plane crashes.

Either way, it pays to avoid situations where the circumstance pits the individual against a governmental hazard.

Federal claims are different than state claims in that if a damage or injury is the result of negligence or legal liability of the federal government or federal agency, the claim is governed by the Federal Tort Claims Act (FTCA).  More specifically, an injured party is required in FTCA cases to file a Form 95 with the governmental entity or agency within two (2) years of the date that legal liability accrued.  This two year statute of limitation or deadline is true regardless of whether there is a state statute of limitation for the same cause of action which may be longer.

Further, with FCTA cases, the governmental entity has up to six months to review the subject Form 95 claim and the claimant is not allowed to file suit during that time.  If the entity does not respond to the claim with an offer or denial within the six month period, then claim is presumed denied when the six month period expires.

Please note that said claimant only have six (6) months to file their lawsuit in a FTCA case after a governmental entity has issued a denial of the claim.  Failure to file suit within six months of being denied results in the claim being completely barred EVEN if it has been less than two (2) years since the event causing the injury!

The FTCA case begins when an injured party “presents their claim” to the agency involved.  The foregoing is accomplished by filing the Form 95.

One must also research specific procedures and rules applicable to the applicable governmental entity or agency in which the claim is sought.  These rules include not only how to bring the claim but also where the Notice should be sent and with whom one should communicate regarding the subject claim.  Many federal agencies will post this information in a section on their respective websites.

Unlike the State of Florida where damages against the state are capped, Federal Tort Claims are not capped.  Therefore, one’s Federal Tort Claim case may have significant value. In the Form 95 itself, there is a blank for the amount of damages that claimant has sustained.  The claimant must put a number, however, one should be careful not to underestimate the value of their claim.  Once a Form 95 is filed with a figure for the damages on it, one cannot increase the amount later claimed.  Consequently, one must be generous in their evaluation.

Attorney fees on FTCA cases are capped at 25% if the case is litigated while attorney fees are only 20% if the case is settled. No fee can be charged for appeals of FTCA cases. Again, the purpose is to remove some financial incentive to sue the federal government; however, it does not make it impossible or not feasible to prosecute.

Further, the FTCA imposes significant substantive limitations on the types of tort lawsuits a plaintiff or victim may permissibly pursue against the United States. The Congress that enacted the FTCA, was concerned about “unwarranted judicial intrusion[s] into areas of governmental operations and policymaking,” and opted to explicitly preserve the United States’ sovereign immunity from more than a dozen categories of claims. More specifically, Section 2680 of the FTCA establishes a number of exceptions preventing private litigants from pursuing certain categories of claims against the United States

It has been debated or at least discussed that certain provisions be enacted to modify the FTCA.  Congress, however, still retains the authority to enact private legislation to compensate individual tort victims who would otherwise be barred from obtaining recourse from the United States under the FTCA in its current form. Congress enacted the FTCA, in part, to eliminate the need to pass private bills to compensate persons injured by the federal government. Congress, though, still keeps some authority to pass private bills if it so desires.  Accordingly, rather than amend the FTCA to expand the number of circumstances in which the United States will be held liable to tort claimants, some scholars and legislators have suggested that Congress should pass individual private bills to compensate particular injured persons or groups of persons who might otherwise lack recourse under the FTCA.  To that end, Congress has occasionally provided some type of compensation to victims, plaintiffs or claimants in situations where the courts have found that the FTCA waiver of immunity provides no relief.

The foregoing is just a general overview of the subject of claims against the Federal government under the Federal Tort Claims Act.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

PERSONAL INJURY CLAIMS AGAINST GOVERNMENT ENTITIES IN FLORIDA

Posted by CSG Firm on

In Florida, as in most other states, if an individual is injured as a result of someone else’s negligence, they can usually file a personal injury claim to receive compensation. However, when a governmental agency is involved such as a city bus or government/public hospital, then such claims must be filed against the government agency, not the employee themselves unless said employees intentionally inflicted the harm and consequently may be held liable.

Plaintiffs injured by the carelessness of government agency or one of its employees in Florida will have to deal with certain rules, regulations or standards. In this article, the term “government” will refer to a governmental entity for a city, county, or the State of Florida. Claims against the Federal Government will be dealt with in another article.

Claims Against a government entity or agency in the State of Florida are limited by law.  This limitation is known as sovereign immunity, and it is based on the English notion that the government cannot be held responsible because “the king can do no wrong.”  The limitation of sovereign immunity extends to all properties and to whomever serves the government. If a garbage truck or police car crashes into a person or a teacher abuses a student, the government decides if the victim is allowed to sue and then limits the recovery up to $200K per person or $300K per tort claim.

In 1975, the passage of Florida Statutes section 768.28 (i.e., Florida’s Waiver of Sovereign Immunity Act, Florida Statutes §768.28) opened the door to claims but also made the entire process difficult to navigate. When the subject strict guidelines are met, a state entity can be held liable for negligence under the same circumstances as an individual but considering the caps permitted under the law. In addition to the caps from 768.28, Florida has also presented a series of barriers in the form of conditions. Failure to comply with all notices, disclosures, and obligations can result in rejecting the claim.

Further, the government is not responsible for policy-making decisions, only those acts that are considered “operational” in nature.  One way of looking at it is this that the decision on whether to put up a stop sign at an intersection is immune from lawsuit.  However, once the decision to install it is made, if it is placed or installed in a wrong manner, not maintained or itself causes a harm, there can be a claim.

Florida imposes certain limitations on the types of claims that plaintiffs or victims can bring, which include but are not limited to:

  • Government employees cannot be held personally liable for damage unless they have caused it on purpose;
  • Claims against the state of Florida are limited to a total of $200K per person or $300K per incident;
  • The state may appeal any resolution of a case; and
  • Actions against State Universities must be brought in the county where the University’s campus is located.

From a practical standpoint, due to the cap on damages, the most the government will have to pay to a plaintiff is the capped amount, so an actual interest in settling pre-suit is very rare, forcing the claimant to sue.

Quite often lawyers do not take cases of damages against the county, city, or state of Florida because the injuries suffered and the medical bills are usually higher than what these cases can recover. What many lawyer try to investigate and seek out are other private parties that could be sued and held liable.

Florida’s sovereign immunity restrictions apply to almost all cases of negligence filed against the state or any of its Cities or Counties, including:

  • Car accidents caused by county employees;
  • Public hospital malpractice cases; and
  • Defective city property that causes injuries.

No matter how many people were harmed, how severe the injuries, or how many negligent parties, the government will, unfortunately, only pay the cap per incident. The maximum settlement will always be $200K per person and $300K per incident, which, as mentioned, usually is not enough to cover the actual damages. This limitation applies when dealing with injuries caused in Florida accidents involving the following, among others:

  • Public transportation vehicles;
  • Police car accidents;
  • Unposted street signs; and
  • Anything related to the municipality’s negligence.

In addition to the government agencies themselves, the Florida Legislature has passed laws giving private entities “sovereign immunity” privileges as if they were governmental bodies.  These include private charter schools, the South Florida Fair, and some hospitals and doctors.  

Additional limitations apply to cases filed against law enforcement officers or agencies. public health agencies, and the Florida Space Agency.  Claims coming from inmates of the Florida Department of Corrections are also subject to special time limits.        

Punitive damages are not allowed against Florida public entities as well as prejudgment interest, and Florida law limits attorney fees to 25% in cases against the government as a disincentive to pursue these cases.

There is a way around or beyond the $200,000 cap on cases against the State or government. It is not an easy process, but the state allows for a process called a Claims Bill. 

To get a claims bill, a victim will need legislators to draft such a bill seeking compensation beyond the sovereign immunity limit.  It is usually done after a trial and judgment has been entered, and after all appeals have been exhausted.  

If the judgment is larger than the cap, one can seek a claims bill.  But after a bill is filed, it will be sent to a special master who will re-examine the facts and circumstances, there will be hearings, and most claims bills die in committee. 

If bill does not die in committee, most special master or referee recommendations are at a reduced amount of what the award was. The legislature (House or Senate or both) may take a recommended amount and reduce it.  Both the House and Senate must pass the exact same bill and then the Governor must sign it.  There are very few claims bills that are passed and signed each year.

Bear in mind that Cities, Counties and the State generally have their own legal departments, so they will most likely litigate the case through the court system knowing that, even if they lose, they will not have to pay more than $200,000.  Accordingly, the applicable governmental entity is in a position where it will rarely voluntarily pay the full liability amount pre-suit.

Personal injury claims in Florida made against public entities can be complicated and complex, but that does not mean that a Plaintiff or victim lacks recourse when a governmental employee or agency harms them in an accident.

The foregoing is just a general overview of the subject of Personal Injury claims against government entities in Florida.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

Real Estate and Inheritance in Florida

Posted by CSG Firm on

If one inherits a house by a Florida Last Will & Testament when the owner passes away with his or her name alone as the owner on the deed, in order to sell it, the inheritor will need to go through the Florida probate court.

Florida does not have an inheritance tax or estate tax. A beneficiary (by Last Will) or heir (without a Last Will) of a deceased person in Florida does not owe any state taxes on inherited property.

Accordingly, to transfer real property from an estate to an heir or beneficiary, the executor or Personal Representative issues and records a deed of transfer in the name of the new owner(s). If the property was held in a trust, then the Trustee will issue the deed to the new owner as directed by the terms or provisions in the declaration of trust by the trustee.

In Florida, there are no separate property taxes, but beneficiaries or heirs will owe federal taxes if the inherited property is sold after transfer. The heir or beneficiary should only owe taxes on the gains (i.e., capital gains) of the property, or if it increased in value from the point of transfer until the point of sale.

With a Lady Bird Deed, under Florida law, when a person dies, the remaindermen (like a designated beneficiary on real property) automatically take possession of the property. No other disposition is legally necessary. Since they inherit by deed in Florida, the said remaindermen are not subject to probate.

It is generally better to receive real estate as an inheritance rather than as an outright gift because of capital gains implications. That is because of the cost basis, which is the cost of the property used to determine the capital gain, if any, when it is transferred. One must pay Capital Gains Tax if they decide to sell the property that was inherited, or a second home or buy-to-let property, in the future. If the property has increased in value since it was inherited or bought it, then the Capital Gains Tax will be deducted from the profit.

As the recipient of an inherited property, one will benefit from a step-up tax basis, meaning they will inherit the home at the fair market value on the date of inheritance(death of the prior owner), and they will only be taxed on any gains between the time the said property was inherit and when it was sold.

The surviving spouse may inherit everything if there are no children or all children are common to both the said spouse & the deceased party. However, if one dies with children or other descendants from the deceased and the surviving spouse, and the surviving spouse also has descendants from previous relationships a different result will occur. Consequently, the surviving spouse inherits half of the intestate (without a Will) property and the descendants inherit the other half.

Florida will afford all intestate heirs an equal share of the estate’s property, which is legally known as “per stirpes.” For example, if a deceased party has four biological and/or adopted children and they were deemed the sole legal heirs to one’s property, each of them would receive 25%.

If one’s heir wishes to mortgage, sell, or rent out the entire property, they must obtain consent from all of the other heirs, yet an heir can sell their individual interest, even to an outsider, without the consent of other heirs.

State laws may vary slightly, but the typical scheme of most states, including Florida (§732.101 to §732.111), is that intestate property passes in this order: spouse, descendants (children or grandchildren), biological and adopted, parents, grandparents, and siblings (and children of deceased siblings).

Formal administration is the more involved form of Florida probate. Formal administration is required for any estate with non-exempt assets valued at over $75,000 when a decedent died within the last two years.

Non-probate assets encompass jointly held property (land, bank accounts) or assets with beneficiary designations or with payable on death designations (life insurance, annuities IRAs).

Exempt property shall consist of: (a) Household furniture, furnishings, and appliances in the decedent’s usual place of abode up to a net value of $20,000 as of the date of death. (b) Two motor vehicles as defined in Stat. 316.003, which do not, individually as to either such motor vehicle, have a gross vehicle weight in excess of 15,000 pounds, held in the decedent’s name and regularly used by the decedent or members of the decedent’s immediate family as their personal motor vehicles.

The favorable aspect is that one could gift their home to their children and if they lived for at least seven years after the gift was made, it would be removed from their estate and no inheritance tax would be due.

In the state of Florida, a $25,000 exemption is applied to the first $50,000 of their property’s assessed value if the property is their permanent primary residence and they owned the property on January 1 of the subject tax year. This exemption applies to all taxes, including school district taxes.

If a person dies before executing a deed to transfer assets to a new owner, the said property will be distributed pursuant to the provisions in the Last Will after probate is concluded. Dying without a Last Will results in intestacy, which requires the court to distribute the deceased party’s assets following Florida’s intestacy laws(i.e., to next of kin).

Inheritances are not considered income for Federal Tax purposes, whether one inherits cash, investments, or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source.

Selling at lower than fair market value means that an individual will have to report the gift to the IRS. Under IRS rules, as of 2022, one can provide a gift of up to $16,000 as a gift of equity before one (the donor) has to pay gift taxes. As the seller and gift-giver, one must pay the gift tax.

There are several ways to avoid paying capital gains tax on inherited property: Sell the inherited property quickly; Make the inherited property one’s primary residence; Rent the inherited property; Disclaim the inherited property and Deduct selling expenses from capital gains, among others.

Again if a person dies without a will or trust and has assets in their name ONLY, then probate is required to distribute property and monies.

A Florida Lady Bird deed, also known as an Enhanced Life Estate Deed, was created to allow property owners in Florida to transfer property to others automatically upon their death while maintaining use, control and ownership while alive.

As an example, unless the Last Will explicitly states otherwise, inheriting a house with siblings means that ownership of the property is distributed equally. The siblings can negotiate whether the house will be sold and the profits divided, whether one will buy out the others’ shares, or whether ownership will continue to be shared. However, under Florida law, if the siblings cannot agree, and any of the siblings want to sell the house they inherited, they can use a legal proceeding known as a “partition action” to force the sale. This legal proceeding is both expensive and time-consuming.

An executor or Personal Representative of the probate estate can sell the house as soon as it is transferred into their legal possession. The job as Florida Personal Representative is to protect estate assets during probate. So, one does not want to wait too long to sell the house after the person dies.

Under Florida law, a Last Will & Testament can be voided if the said Last Will was procured by fraud, duress, or undue influence. A person must file a petition in a probate court case to contest a Florida Will.

In most circumstances, there will need to be a court order to transfer the property. In Florida, that means opening a probate court proceeding or administration. In the state of Florida, probate is a court proceeding that is filed in the county where the deceased person last resided. The two types of probate are summary and formal administrations.

If probate is not filed, the probate court will not distribute the assets of the estate. The probate process provides a legal mechanism for resolving disputes over the estate, and without it, beneficiaries or heirs may have to resort to litigation to assert their rights.

There are key assets that are protected from creditors in Florida which include: A homestead property, with some acreage limitations; The wages of someone who qualifies as head of household; Annuities; Life Insurance cash value; Retirement Accounts, and Tenants by entireties property when the judgment is against one spouse in a marriage(not both).

Property which is jointly owned with a survivorship right will avoid probate. If one owner dies, title passes automatically to the remaining or surviving owner. There are several joint ownerships- with rights of survivorship for anyone and Tenancy by the Entirety for spouses/married couple.

A Florida homestead is not subject to probate. Probate proceedings involve only assets subject to creditor claims. The Florida homestead is exempt from creditors, so it is not part of the probate estate. Therefore, title to a Florida homestead transfers to heirs quickly (at the time of owner’s death) without waiting for the completion of probate proceedings.

Florida is one of the few states that allow enhanced life estate deed or Lady Bird deeds. These deeds allow residents to preserve their eligibility for Medicaid during their lifetimes while keeping valuable assets in the family. After death, the real property named in a Lady Bird deed passes automatically to beneficiaries without probate, which means that assets cannot be taken by the state to recoup any Medicaid benefits used by the decedent.

Again the decedent’s homestead is not part of the probate estate, because it is not subject to creditors. However, the Personal Representative of the deceased’s estate often needs to obtain a court order stating that the property was the person’s homestead/primary residence, particularly if the family plans to sell the former homestead. The heirs can request or petition a court to issue an Order Determining Homestead Status of Real Property.

Title companies will not insure the sale of a deceased party’s homestead unless the title examiner is sure that the property legally qualified as an exempt homestead, free of potential creditor claims and the heirs or beneficiaries are determined.

A title company knows from the public records that a deceased parent owned their home. However,  it may not be clear from the public records that the residence was, for example, the parents’ homestead because public records do not indicate whether an owner resided in a property at or before death. Even though the owner may have previously applied for a homestead tax exemption, there is nothing recorded in the real estate or Official public records identifying the occupant of the subject property. The deceased parent may have abandoned residency before death; for example, the parent may have been living with a child and may have rented the former homestead property to a tenant to get rental income to live on.

Title companies regularly insist on or require a court order that the property was the owner’s homestead through death when the deceased owner had creditors. A court order requires a court proceeding, and the appropriate court proceeding is a probate. As a result, surviving family members wanting to sell the parents’ former primary residence may have to open a probate proceeding even if the parents conveyed the house to a living trust and there are no probate assets.

The sole purpose of the probate is filing a court petition to declare the deceased’s residence to be their exempt homestead. The probate court routinely grants an order determining homestead status. This order ensures that the house is exempt from unknown claims and leads a title insurance company to issue insurance to potential buyers and their mortgage company.

There are a few states that levy taxes on the estate of the deceased, generally referred to as the inheritance tax (or the death tax). Fortunately, Florida does not have a separate state inheritance tax. Even further, heirs and beneficiaries in Florida do not pay income tax on any monies received from an estate because inherited property does not count as income for Federal income tax purposes (and Florida does not have a separate state income tax).

If an asset does not have a named beneficiary or remainderman, or rights of survivorship, it will probably have to go through probate to change or transfer ownership pursuant to the Florida Probate Rules (2023). The most common assets that go through this process are bank accounts, real estate, and certain personal property.

The foregoing is just a general overview of the subject of Real Estate and Inheritance in Florida.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.